Munich Re continues to see “favourable” prospects in the reinsurance market, with cyber, data analytics and artificial intelligence having been identified as the most important growth areas for the company.
Discussing the trend of digitalisation within the industry, Board member Torsten Jeworrek asserted that traditional insurance will be “radically changed” by future advancements.
“It will give rise to new fields of risk in need of insurance solutions,” he noted, but added that Munich Re has already laid the foundations for profitable growth thanks to its numerous digital and innovation projects.
Identifying future trends and engaging in risk partnerships on new technologies are at the heart of Munich Re’s strategy, he explained, but it is cyber that continues to represent the “top risk” as both the greatest challenge and opportunity.
The reinsurer believes that the economic significance of cyber risks, and therefore the demand for cyber insurance, is set to grow appreciably over the coming years, particularly following the dramatic rise in cyber attacks following the move to working from home due to pandemic lockdowns.
Given the rising number of losses, prices for cyber insurance have burgeoned, and risk carriers have limited their capacity, leading to a huge demand for insurance and service solutions.
“The increasing number of ransomware attacks is putting a serious strain on the economy. The insurance industry helps companies to become more resilient to cyber attacks and mitigates damage in the event of an attack,” said Stefan Golling, Munich Re Board member for Global Clients/North America.
“However, some systemic risks can only be managed by the state in conjunction with the insurance industry. These risks range from terrorist or politically motivated attacks to cyber warfare and are preferably covered by pools. Moreover, it is in everyone’s interest to provide clarity on the scope of cover through appropriate wordings.”
For its part, Munich Re has kept the rising ransomware losses in its book of business at a manageable level, thanks in part to the stabilising effect of price increases in a hardening market environment. As such the reinsurer is adhering to its plan to grow profitably based on a current market share of roughly 10%.
The company also plans to further expand its network and partnerships, while honing its expertise in cyber modelling and developing solutions that help to prevent and cope with attacks, in addition to providing cyber coverage.
Looking at the wider opportunities of data analytics and AI, Munich Re continues to see potential for optimisation of processes within sales, customer interaction, and claims settlement and underwriting.
The increasing use of machine-learning technology and artificial intelligence in business has also given rise to a dynamic market environment with many new fields of risk – and the need for novel insurance solutions.
“We now have a worldwide network with hundreds of specifically recruited data analytics experts and trained specialists dealing with this topic,” said Fabian Winter, Head of Data and Analytics (DAA). “In conjunction with the divisional units, we are working on well over 100 initiatives launched to provide our clients with innovative solutions.”
Summing up Munich Re’s perspective on the digital question, Jeworrek concluded: “Insurers are addressing the digitalisation megatrend with its tremendous opportunities. They are automating their internal processes using algorithms and generating new types of cover with the help of artificial intelligence – for the benefit of their customers.”
He continued: “Even more important are strategic liaisons with customers to identify major trends and future risk requirements. Munich Re has been investing in the requisite know-how for years, and developing solutions for the digital world: we insure the performance of AI algorithms, and are the market leader and pioneer for the top risk, cyber.”